‘Health insurance industry has the potential to add 35 crore Indians in future’: Niva Bupa's Krishnan Ramachandran

The health insurance industry has the potential to add 35 crore Indians in the future. Health insurance currently holds a 40% market share, making it the largest in the non-life category. It is also the fastest-growing sector among non-life insurance segments post-COVID, according to Krishnan Ramachandran, MD and CEO of Niva Bupa. In the fiscal year 2023, over 550 million people across India were covered under health insurance schemes.

Ahead of the company’s IPO launch on November 7, Ramachandran said: “Growth potential of the health insurance industry is enormous. If you look at the number of lives covered, how much is the country spend on health care and the level of insurance, it is clearly inadequate, so the opportunity is big.”

In order to reach more people, the company has expanded its product offerings in all categories. The company has also invested in its distribution channel and has increased its number of offices from 55 to over 210. Additionally, the company has grown its number of agents from 25,000 in FY 2020 to 150,000 in FY 2024.

Talking about what led to the gradual increase in penetration of health insurance, Ramachandran said: “Covid has been the game changer for the industry, and digital transactions have become more common in the health insurance industry and this has led more people going for it. Apart from this, the state insurance programs, and industry initiatives have been instrumental in building awareness among people.”

Overall, Ramachandran remains positive about the industry's growth outlook. He predicts that the industry will continue to grow at a rate of 17-18% CAGR over the next 5 years. Regarding the impact of rising medical costs, he believes that inflation is unavoidable. Instead of waiting 2-3 years to revise rates and shock consumers, they now pass on single-digit inflation-linked premiums each year. Ramachandran also points out global trends in the health insurance industry, noting that healthcare spending globally is around 7-8%, while in India it is only 3-4%. This number is expected to increase in the next 5 years.

Established in 2008, Niva Bupa Health Insurance Company is a joint venture between the Bupa Group and Fettle Tone LLP, providing insurance in the health sector.

The IPO of Niva Bupa Health Insurance Company consists of a fresh share sale of Rs 800 crore and an offer for sale (OFS) of up to 1,400 crore by its promoter entities, totaling Rs 1,400 crore. The company aims to raise Rs 2,200 crore through its IPO.

The net proceeds from the issue will be used to strengthen the company's capital base, enhance solvency levels, and for general corporate purposes. The proceeds from the OFS will be received by the selling shareholders of the company - Bupa Singapore Holdings and Fettle Tone LLP.

The book-running lead managers for the IPO are ICICI Securities, Morgan Stanley India Company, Kotak Mahindra Capital Company, Axis Capital, HDFC Bank, and Motilal Oswal Investment Advisors, with Kfin Technologies serving as the registrar for the issue.